As the COVID-19 Downturn Deepens, IMS Barter Is Busier than Ever
Everything old is new again. As business bottoms out as a result of COVID-10, the oldest form of trade—barter—is booming. However, this is not your father’s direct trade barter model. And that makes it even more appealing to cash-strapped businesses now.
Just ask John Strabley, CEO of IMS Barter (International Monetary System) in New Berlin, Wisconsin. Formed in 1985, IMS has been providing an alternative method of payment that conserves cash, attracts new customers and gives businesses a competitive advantage.
“Since the abrupt economic shutdown in March,” says Strabley, “Our marketplace has hit record online purchasing volume. Our website, IMSBarter.com, has seen a tremendous increase in traffic.”
The trade organization, which has 16,000 members spread across 54 metropolitan markets, does well in the best of times. However, during times of crisis, its online business flourishes. It happened during the 2008 recession, and it’s happening now.
The reason is simple: by trading their unused capacity and/or surplus products, stalled businesses generate another revenue source, reduce costs, and purchase necessities without spending cash.
Today’s economic downturn has forced many businesses to pause activities like buying ad campaigns, printing new brochures, increasing employee health benefits and expanding office facilities. But IMS clients don’t have to hold off. Trade provides the buying power that’s businesses need to grow, especially now, when creditors come calling.
How Modern Trade Commerce Works
In its oldest, simplest form, bartering involved an equal trade: one person or business swapped goods or services for something in return. Modern trade doesn’t that function way.
IMS is actually a financial services firm. Acting as a third party, it facilitates transactions between businesses by utilizing trade dollars (T$), its monetary unit of currency. Clients set prices—in IMS dollars—for their products and services; other members of the network pay in kind through the IMS payment platform. Businesses pay a monthly membership charge, plus a modest fee per transaction.
IMS clientele include retail and ecommerce companies that sell B2C and B2B products, service companies (contractors, auto repair shops, computer technicians), hotels and restaurants, professional service providers (dentists, attorneys, accountants), business consultants and more. In short, businesses can find virtually anything they might need.
When they welcome this new revenue stream as an accepted payment method, member businesses are in complete control of how—and how much—they trade. Members can set the maximum volume of trade dollars they’ll accept per month, or elect to not market themselves during peak cash seasons. Within this closed monetary network, businesses can budget accurately; although, right now, some welcome every trade dollar.
As far as tax implications, the IRS treats barter transactions like cash, and transactions are reported accordingly. At the end of the year, IMS provides each member with Form 1099B.
How Trade Commerce Can Help Stricken Businesses Right Now
During the current downturn, by opening a trade account offers businesses of all sizes several unique advantages. For example, IMS Barter:
- Provides a broad new marketplace for attracting new customers. (Each IMS member has a listing on the IMS website database that is searchable or promoted by their internal sales team to other businesses in the network. A payment system selling for merchants.)
- Allows companies to sell their products at full price—no need to discount prices online or liquidate slow-moving stock.
- Creates work for employees, so they needn’t be laid-off or furloughed.
- Allows companies to purchase needed supplies and services without dipping into precious cash reserves.
“Yesterday, one of our brokers was on the telephone with a longtime member who was distraught to tears,” says Strabley. “His family has owned a restaurant for 39 years and he’s frightened he’ll lose it.”
“The broker assured him we’re here to help. Our brokers are having similar conversations across the country, offering support and solutions to each client’s cash flow concerns and most often that starts with new sales.”
IMS’s most active members generate as much as 10% of their annual revenue though trade. In 2019, the company processed more than $200 million in transactions. To date, more than 100 members have made more than $1 million in sales, earning their place in IMS’ Million Dollar Club.
That may be a way off for some. But for businesses looking to generate activity while COVID-19 runs its course, opening an account with IMS Barter is a great place to start.
John Strabley is the CEO of IMS (International Monetary System) www.IMSbarter.com, based in New Berlin, Wisconsin